Beijing’s move to scrap the floor on lending rates is not yet a game-changer for Chinese banks, but it may have just started the countdown to an eventual industry overhaul which will deprive the banks of virtually risk-free profits.
Any liberalization is seen as positive for China’s financial sector and the world’s second-largest economy. But many Chinese investors fear the nation’s banks, which for years have made easy profits from state-mandated spreads between borrowing and lending rates, will struggle to benefit from more competition.
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